The war in Iraq is virtually over, interest rates are at 45 year lows, and corporate giants are seeking redemption for recent scandals. These conditions are causing change, which appears to be good for the Charleston Office market. Increased activity in the overall market has been demonstrated in new construction projects, build-to-suit facilities, office condominium purchases, and tenant moves from Class B to Class A space. The activity has had a mixed effect on typical office product indicators such as inventory, vacancy, rate and absorption. Inventory and vacancy increased for both the overall and Class A markets; however, absorption increased in both categories as well. While overall rates increased slightly, Class A rates decreased. Tenant improvement allowances remained stable for Class B buildings, but the Class A sector experienced an increase in tenant improvement allowances as several buildings competed for quality tenants.
The recent surge in vacancy from 10.31% at year end 2002 to 18.26% at mid-year 2003 was predictable, based upon new construction and relocations by a few major market tenants. Three tenants moved into space they purchased, one other moved to another sub-market. Demand for the Downtown Charleston market remains strong and is driven by legal, government and service sector tenants. Though rates have decreased on average in response to the short term rise in vacancy among Class A buildings, rates will firm up as the year progresses. These combined factors have several developers looking for sites to develop a few quality projects.
Download the full report
For more information, including the market summary statistics, download the full research report.Download report